I've had more time to study the market tonight and is running a second and a third instances of Quantised Trading Desk (QTD) to trade 3 currencies in total simultaneously. For my dollar bull sentiment, I'm dividing between USDJPY long and NZDUSD short. QTD still hasn't taken a position in USDJPY in the past 24 hours. That's a good thing as USDJPY is still drifting downward today even as the dollar is gaining some ground. My line in the sand is at 80.70 for USDJPY and above 0.8100 for NZDUSD. EURGBP long is a hedge against my dollar longs. Again, I'm not making any trade at this point but merely setting up QTD to wait for the right moments to enter. A break below 0.8660 for EURGBP would challenge my bullish bias. These three currencies should be my complete market bias for a while. I'm just going to let QTD do its thing and trade for me. Hopefully this will be the last you'll hear from me about my market bias for a while. [caption id="attachment_5342" align="aligncenter" width="580" caption="NZDUSD, weekly"][][][/caption] [caption id="attachment_5343" align="aligncenter" width="580" caption="EURGBP, weekly"][][][/caption]

[]: http://www.quantisan.com/static/images/2011/04/2011-04-18-NZDUSD_wkly.png []: http://www.quantisan.com/static/images/2011/04/2011-04-18-EURGBP_wkly.png

I have unofficially launched my Quantised Trading Desk (QTD) expert system this weekend as the system is ready for live trading after almost a year in development. You can't miss the announcement if you visit the new frontpage of this blog. So, I won't talk about it anymore here. The purpose of this post is to discuss my forex trade. It's been over 7 months since I've traded on the forex market. I have been working on QTD during all these months to improve my overall trading. Anyway, let's dive right to it for my first trade back into forex. I am bullish on the U.S. dollar this week. Why? The Financial Times is letting on rumours that the US Fed is signalling an end to quantitative easing. Coincidentally, the U.S. dollar appears to be testing supports across all major currencies. Secondly the US equities market hasn't been able to make higher highs even as the dollar is marking new lows. Still, I'm not one to call a bottom, nor am I hunting for one. This is merely a good risk-reward trade to gun for an obvious move. In particular, USDJPY appears to be the best of the bunch as its been holding well over the past few months while the dollar crumbled. The fact that Europe and US are rumoured to be lighting up on the money printing whereas Japan's money printing press is on full steam for the quake reconstruction (Yen bearish) is a decent excuse to place some chips on USDJPY. You might have noticed, I haven't specified my entry price, amount, or stop loss price as usual. This is because I am relying on the Quantised Trading Desk expert system to trade USDJPY for me. QTD will monitor the market for me and execute trade entries and exits as it sees fit to accumulate a long position in USDJPY. All the risk management and quant analysis are built into the system. So I don't have a position yet because I'm waiting for QTD to do the grunt work. [caption id="attachment_5332" align="aligncenter" width="580" caption="USDJPY weekly chart"][][][/caption]

http://www.ft.com/cms/s/0/bcad7330-691a-11e0-9040-00144feab49a.html

[]: http://www.quantisan.com/static/images/2011/04/2011-04-17-USDJPY_wkly.png

Update January 26: The share price of PMV.V crossed my mental stop yesterday so I had to reassess the position. I sold my shares at \$0.56 for a loss of (\$0.56 - \$0.62) * 1000 = \$70 + \$19.90 commission = \$89.90 = 0.9% of account. Gold is falling while USD tanked this week. The lack of volume on today's goldminers rally is also uncharacteristic of the recent uptrend. The long term uptrend of gold and gold miners is unmistakable on both fundamental and technical basis. I am taking a dabble in this junior gold miner as its share price is making a gap fill on a recent breakout (Fig. 1), amongst other things. Intraday chart (Fig. 2) is also showing signs of life at this support level. What's going to happen to gold as it breaks below 1350 (first time since November) from worries about Chinese inflation, which led to strength in USD (on fear of further Chinese tightening) as EURUSD dropped 60 pips in 2 hours. See FT: Fears grow that China is overheating. Couple that with political and economic uncertainty, we have a short term uncertainty in gold's direction. However, all these is in line with the underlying gold-bug case that money is becoming more worthless as governments pump in money to their respective economies. Another point to note is that as the Shanghai Composite and Bombay Stock Exchange (i.e. growth markets) are making 3-month lows in recent weeks, people will start to look for other assets to diversify their wealth. This is all conjectures anyway. I can't predict the future.I am merely placing my bet as the stars seem to have aligned for me to increase the probability of this good reward/risk trade. Mental stop is \$0.55. Hard stop is \$0.48, however, I'll give it some margin and say 0.40 is my stop as liquidity is thin in this junior. Thus, risk is (\$0.62 - \$0.40) * 1000 = \$220 + \$9.95 commission = \$229.95 = 2.4% of account. Note: You might have noticed that my trade log style has changed for 2011. I am trying to jot down my thought process rather than the data analysis and numerical logic to better capture my thinking for the record.

[caption id="" align="aligncenter" width="570" caption="PMI Gold Corp. (PMV.V)"][][][/caption] [caption id="" align="aligncenter" width="570" caption="PMI Gold Corp. (PMV.V) intraday"][]1[/caption]

Market is tanking (Figure 1). Lots of pessimism in the news. Time for me to load on some growth stocks. I'm passing the goldminers in this move as the dollar seem to be rising from the dead and gold may be consolidating.

[caption id="" align="aligncenter" width="570" caption="TSX, 12500 looks like a fine support, doesn't it?"][][][/caption]

Instead, I'm picking a growth stock, Lululemon (LLL.TO). Lululemon is holding well in this down move. Furthermore, the intraday test of support at 46.50 looks promising as there were few sellers at that price level. The recent break above long-term resistance at 48 is good too. So is the 19.6% short float... Anyway, you get the picture.

[caption id="" align="aligncenter" width="570" caption="Lululemon (LLL.TO)"][]1[/caption] Risk is (\$47.04 - \$46.50) * 200 = \$108 + \$9.90 commission = \$117.9 = 1.2% of account. Update: Woodshedder's post today explains his current view of the market, which happens to coincide with mine at this time.

It's been a while, my old friend--Manulife Financial (MFC.TO). Now, die! Stop is stock closing price above 14.30, today's high. Risk is about (\$14.30 - \$13.97) * 4 * 100 = \$132 + \$27.90 = \$159.90 = 1.6% of account. Note that calculation is not accounting for option theta (time decay).

[caption id="" align="aligncenter" width="570" caption="Manulife Financial (MFC.TO)"][][][/caption]

Update the day after: Stopped out at \$8.81 for a loss of \$64.90 = 0.7% of account. I'm giving this short oil play another try. See the topping COT (CFTC: Commitments of Traders) lagging open interest data (bottom of Fig. 1). I waited for a breakdown in the hourly chart (Fig. 2) to make my entry into this short. The market has been coiling up for the entire month of October. Something big is about to happen sooner or later. Perhaps the U.S. midterm election tomorrow can finally move this market? Stop is at 8.80. Risk is (\$9.03 - \$8.80) * 250 = \$57.50 + \$9.90 commission = \$67.40 = 0.68% of account. Position size is still small with this lack of market volume.

[caption id="" align="aligncenter" width="570" caption="Crude Oil"][][][/caption]

[caption id="" align="aligncenter" width="570" caption="Crude Oil, hourly chart"][]1[/caption]